BC Premier: “I think the market’s good, it’s a buyers market. I want to make sure I get in before prices start to rise.”

“In Kelowna on Thursday, Clark said she has already been on the Internet looking for a home but would also like to hear from anyone in real estate about a home that requires low maintenance.
“I have a cat, but I won’t be bringing her. So no pets, no smoking and low maintenance,” she said.
The premier told reporters at her victory party on Wednesday night that she didn’t want to be “presumptuous” and start looking for a house while she was campaigning, but she’s getting serious now.
“I think the market’s good, it’s a buyers market. And you know the riding is really getting stoked again, so I want to make sure I get in before prices start to rise.”
– from The Times Colonist, 11 July 2013 [hat-tip kabloona]

Announcement:
With this brief (but sweet) post, we’ll be taking another break from our (admittedly very skeletal) posting habits of the past six weeks. We’ll be on hiatus for at the very least the rest of the summer. Refer to VCI and Whispers for ongoing Vancouver RE discussion. We hope to be back in full at some point. Enjoy the fine weather, and keep well, all. – vreaa
(PS: Nothing has changed regarding our overall bearish outlook on the Vancouver RE market.)

204 responses to “BC Premier: “I think the market’s good, it’s a buyers market. I want to make sure I get in before prices start to rise.”

  1. Enjoy your summer, get out in the sun everyone!

  2. We’ll miss you!
    Kelowna has been a buyers market since 2008, so the tide has to turn some time. Doesn’t it? Oh wait…

  3. When even the Premier has been press-ganged into fluffing real estate, you know something’s wrong.

    She doesn’t take to the airwaves to convince us that we should avoid prolonged exposure to direct sun, or watch less TV, or save for retirement, because these facts are self-evident.

    But she does feel the need to explain to us that condos in Kelowna are going Up! in value soon (not now, mind you, but soon!) so we should buy now! or be priced out forever! (R)

    • 52% Backed By Real Estate – Analysis Of Contributions To Campaign Of Christy Clark, New Leader of the BC Liberals
      VREAA 1 Mar 2011

    • [NoteToEd: Well… in my defence, BurnaBonian did say, “fluffing”. Sometimes, eidetic memory is more of a curse than a gift. More to the point, is there so much as a solitary Terrifying&Pityless ProtoRealtor™ of OgoPogo daring enough to play ‘DirkDiggler’ to Crispy’s ‘RollerGirl’ in the DezRezQuest? The Game’s afoot! As Hugues Aufray might say, “Adieu Monsieur Le Professeur”.]

  4. PS VREAA, enjoy your summer.

    In before inevitable “blaurrr anuthr berrrr caputulates” garbage.

    Hope you’ll just delete with extreme prejudice, and/or post photos of the vacation that was paid for by not having to help re-envelope a condo tower or pay a realtor $20,000 every time you move!

  5. The electors of her ‘new’ riding must have very low standards to vote for a Vancouverite parachuted in just to get into the legislature. If they just want clout why not elect an international leader or Billionaire to represent.

    • I think this was WAC Bennett’s old riding. So there’s that.

      • Naked Official Returns

        WACKY loyal cadre would disapprove of the declining purchasing power of vancouverites and british columbians in general.

        he could be a tea totaling fundamentalist but i am convinced gordo et christy are making him spin in his grave – i am fairly sure he was a (slightly misguided) idealist who wanted the plastic-fantastic white picket fence life for all British Columbians. I also don’t think Cecil would have tolerated carrying the ‘highest rate of child poverty in canada’ crown for very long.

        tra la la fire away at me for my heresy

  6. Have a great summer vraa.

  7. Receding Gains

  8. Why is Nemesis so annoying with his postings of videos only? Videos are only funny when you post one in a long while and if it’s relevant to the topic at hand, but constantly posting videos becomes stupid. I know you won’t stop Nemesis, but really, smarten up a bit.

  9. Yep, Krispy Clark just another “post turtle “….

  10. a real Vancouver booster told me Vancouver is a world class sports city….
    thats pretty funny for a city that has only bush-league sports….

    i should have asked him why the NBA and MLB wont touch Vancouver with a 10 foot pole

  11. VREAA quit again? So soon? Well I suppose that’s proof that life goes on regardless of whether or not the trajectory is up or down or sideways.

    • ‘Chipper’ = ‘whipmaster’.
      [yawn. -ed.]

    • VREAA FTW.

      Jesus Christ is this the first public impact of the IP4 address pool exhaustion? That all pointless, mindless, angry, resentful bull trolling from sad lonely people who have staked their families’ futures on an investment class that’s overvalued by 2-300% should come from a small and finite group of IP addresses?

      actually that’s not so bad…DEPLOY BAN HAMMER IN 5, 4, 3, 2…

  12. pregnant again? or buying a home in detroit?

    • Detroit still has a better economy than Vancouver,

      • Peter Sunstone

        Only you could see the silver lining for a city like Detroit! Now I know why you hate Vancouver so much. We don’t need types like you living here in the Lower Mainland! You probably hate Lululemon, Starbucks, Whole Foods and people who have it better than you, correct? I thought so. Whereabouts do you live on the eastside? Do you smoke? Coz you sound like a loser, who smokes as well. Har Har Har.

      • ‘Peter Sunstone’ = ‘Waylen’ = ‘Jason’ = Property_Magnate
        [yawn… falls off hammock with boredom… -ed.]

        PS: Detroit RE will outperform Vancouver RE over the next 5, 10, 20+ years (In fact, pick your own time-frame!).

        PPS: Imagine a character in a novel defined by their affinity for “Lululemon, Starbucks, Whole Foods”….

      • tedeastside

        vancouver’s economy is largely based on Marijuana if everybody quit smoking… Vancouver’s economy would completely die, currently its on life support , …i forgot Detroit Doesn’t have world class companies like 1-800-got junk

    • “PPS: Imagine a character in a novel defined by their affinity for “Lululemon, Starbucks, Whole Foods”….”

      That was a challenge, right?

      Right?

  13. Receding Gains

    Good one for the archive. Shiller on the nature of bubbles – referring to them as a psychological virus triggering epidemic outbreaks of real estate optimism. Like a recurring bad rash I suppose. Vancouver has a baaaad case of it.

    http://www.guardian.co.uk/business/economics-blog/2013/jul/19/speculative-bubbles-property-stocks-bonds

  14. 4SlicesofCheese

    http://www.cbc.ca/news/canada/british-columbia/story/2013/07/19/bc-wall-centre-window-replacement.html

    Hoocoodanode a floor to ceiling glass tower building would have issues?

  15. Bull! Bull! Bull!

    When is the epic crash going to happen? Do people still think prices are going back to 2001 real prices levels, lol.

    • For guys like you I strongly suggest you take your own advice and buy like there is no tomorrow. Better yet…….leverage it up to the max.

      See you on the other side!!!!

      • Peter Sunstone

        Don’t need to leverage it up to the max when you have money from previous real estate investments. You’re the one on the sidelines the past 10 years (if you are one of the perma-bears!) without any equity that will need to leverage the most IF you EVER get into a house. Most likely not however – probably rent in Newton, Surrey for the rest of your life.

      • You do not need to be a “bear” to appreciate that Vancouver is in a bubble, Peter. Having cash from an earlier high price sale does not protect you like garlic either when you buy into another equally outrageous purchase. You may think you have beaten the system but I am sure you have no clue as to why even a relatively small debt burden can be onerous in a no-bid market where asset prices decline suddenly (which is coming, by the way). As to my own circumstances which are probably none of your business anyway…..but no, I am not a renter in Vancouver which you assume incorrectly and my comments are valid because they are premised on the facts related to the rise and fall of assets which is ALWAYS magnified by excess credit. You get a fail because you misunderstand that “equity” expressed as a percentage of real estate net worth is not that meaningful in an environment of falling asset prices. Your equity stake is paper worth but it can fall to below zero if you have borrowed heavily against an overpriced property. The only valid amount of ownership is the paid-up portion of the total mortgage value, not the equity based on an appraisal which can vary substantially in a falling market. I really doubt you get what I am talking about though so it is probably a waste of my time. Go figure it out on your own.

      • Burnabonian

        QUOTE = “Peter Sunstone | 25 July 2013 at 1:34 pm |

        Don’t need to leverage it up to the max when you have money from previous real estate investments. ”

        Post screenshot of bank or investment account proving that you “have money from previous real estate investments”.

        If you don’t do it, you’re a goddam liar.

        If your “money” is all tied up as equity in a real estate flip-in-progress, you’re a goddam liar.

        Equity != money

      • Burnabonian

        Burnabonian | 25 July 2013 at 4:24 pm |

        QUOTE = “Post screenshot of bank or investment account proving that you “have money from previous real estate investments”.”

        Didn’t think so.

      • Peter Sunstone is one of the religious believers in “equity” wealth, Burnabonian. That suggests to me he is fully committed to the notion of investing for speculation and growth in the Vancouver market.

        Equity is what he cites when ridiculing the risk of leverage.

        Equity in our case is built on a mountain of expectations regarding the never ending price growth of housing in Vancouver’s bubble market though. What equity represents is the difference between the debt registered against a property and the eventual sale price. That figure is the amount of money that you might recover following the sale and it does not necessarily represent the amount of money the owner has invested.

        It can even be a negative number as we shall see.

        The upside of price bursts where 10 to 15% annual appreciation in homes can make you wealthy without owners having made unusual contributions to the home that would justify that growth are not considered normal though. These are exceptional times and this price growth we have seen in Vancouver is breaking all the long-trend rules.

        An equity stake can quickly become a fiction too when a speculative bubble bursts and the market begins falling back to earth. This is the risk of owning assets that have peaked in price. Equity can vanish as quickly (more quickly usually) than it arose in the first place. So with it’s decline goes wealth.

        On one level Peter is correct. As long as prices keep rising his idea is valid. To remain active and invested in Vancouver real estate most buyers need to come to the table with proceeds from a prior (inflated) sale which will then allow them to move up to a better property.

        That is the nature of a bubble.

        That is just not possible for someone coming from out of town (for example) if they are the typical Canadian. From the statistics on typical net wealth in this country we know that the vast majority of citizens could not plausibly raise the million plus dollars cash required in order to buy a Vancouver home without employing credit and even extreme leverage to complete the purchase.

        So Peter is right that you don’t need to leverage up if you have cash-in-hand-equity from a prior property sale and providing the buyer is not required to pony up extra cash to close the deal. He is wrong to think it buys safety though.

        His idea only works well if a person is downsizing from a house to a condo or changing residence from the West side to the East for example on the assumption the next property is of lower value even after taking into account sales commissions, moving fees, legals etcetera.

        Where the trouble arises is when assets (homes in this case) begin to fall and owner equity starts to decline. At that point buyers are difficult to locate and most who do come to market will underbid prices as they attempt to find true value. This is the price discovery process at work in a soft market.

        Worst case scenarios can easily be imagined for serious declines that I believe lie ahead. We have seen this story play out in Vancouver before in fact. During the Great Depression, home values in some parts of town crashed up to 90% peak to trough. Employment vanished, business’s closed by the thousands and even the formerly wealthy, those with only modest debts registered on properties were made penniless.

        Oh Please!!! How can that possibly happen, you might ask?

        Well it is simple mechanics as it turns out. Say you bought a home in 1925 for 100,000 dollars. You plunked down 25% which was usual for the day leaving you with a bank debt of 75,000 dollars plus interest. That home may have inflated in value to 200 thousand by the time 1929 rolled around meaning that your cash stake represented a mere12.5% but your “equity” was now a phenomenal (for the day) 125,000 which included your original grubstake.

        So you are feeling flush, living in a tony new neighborhood and enjoying life’s best as your property value grows monthly. Jobs are plentiful, the economy is on a tear and maybe you even got a recent raise which makes you feel pretty darn secure. You have solid collateral that any bank would be giddy to lend against.

        One day your banker friend (we all have one) suggests you get invested in the stock market. It is booming of course. Very ordinary people are making fortunes with almost no effort. You look at your monthly income and decide it is not big enough to support your investment dream so you head off to the bank and do a little negotiating so you too can get on the equities gravy train.

        They are conservative in those days though.

        They will lend alright but not in excess of the 25,000 dollars you originally invested in your home. No sweat you say……that is more than enough to find fortune in the stock market and there is no risk because of course you will still have that massive 100 thousand in home equity remaining after your loan is signed off.

        So you get out your weekend copy of the Vancouver Sun and start sorting through all the stocks on sale. You find a great batch and within months you are making money on the bubble of the day.

        But something funny happens next.

        Inexplicably, during 1929 the first of the major market corrections happen. Many more will follow but almost nobody can foresee it at the time. You hang tough knowing in your heart you will bounce back and survive. No way will you cash-out low and get beaten. Even worse, how would you recover without years of savings to pay back all the losses if you sold at (what you think) is the bottom.

        An even funnier thing happens next though. Resource prices start dropping dramatically. Business tightens, credit becomes difficult to obtain and within a year there are millions of layoffs of workers literally across Europe and America. Worry sets in as jobs losses mount and most are already saving instead of spending which ends up greatly magnifying the situation of no employment. The economy goes into free-fall as dust bowl conditions wreak havoc on prairie farms.

        The waves of stock price declines just keep on coming as revenues fall for most listed companies over the next few years. Now there is almost no hope of recovering so you sell out just to salvage what little remains of your portfolio and return the proceeds to the bank. Later that week you get fired (just a coincidence of course) as the boss sees business activity fall by half.

        But there is little financial support for you once the meager city benefits run out and you are unable to find more work. Your wife struggles just to keep food on the table and pay for heat. Your next step is to sell your home. No problemo! It must have value. The appraisal said so.

        Unfortunately everyone else is selling their homes too at the same time in order to harvest the fortune (that was) contained there. But prices are now falling through the floor as an outcome of too much supply and by the mid Nineteen Thirties when you finally get a bite your home sells for a measly 20,000 dollars which is just a fifth of its original 1926 purchase price.

        Now you are jobless, homeless and deep in debt. Maybe divorced too.

        Your grubstake has been wiped out along with all the “equity’ you thought you had and the bank will be collecting from you for the next decade if you don’t declare bankruptcy. Nobody ever warned you that house prices can actually fall. Worse yet…..they never mentioned you would have to pay back the whole damn debt you signed up for even if they did decline!

        Life is so unfair.

        So the question we ask is this…..What is the value of so-called equity in a falling market? Is it really wealth if it can vanish almost overnight during a bust in the economy that is outside your control? Should you not consider that even small relative debts can render you insolvent during a credit collapse? Is equity even money if you don’t cash out?

        The fact is, even the wealthy were wiped out during the Great Depression for exactly this reason. They could not foresee that even modest debt was a killer in a no-bid market for their prized homes and assets which fell in value to a price BELOW the net debt that had been taken out against them.

        This little story is meant to be instructive by the way. So pay attention.

        We stand on the verge of a credit crisis emanating from China that will be triggered when the value of property there begins to fall from the current lofty bubbly highs. The heavily inflated assets that underlie the edifice of credit built above are almost totally reliant on a continuation of price appreciation which most now acknowledge is not sustainable.

        The collateral itself is impaired because it is not priced to fair market value. It has risen well beyond what normal people can afford to pay and yet ever more credit is being issued against it. Credit is therefore inflated based purely on how property is overpriced. This is important.

        When Hong Kong, Singapore or Chinese land prices start to fall an informed person should shudder from fear inside and run for the damn hills because that will be the triggering moment that will spell disaster for banks there. The impact will certainly be felt in Vancouver real estate (a story for another day) and the fictional equity wealth so many foolish folks think is contained there will vanish almost overnight.

        “But bubbles never burst”!! You will shout in retort.

        Oh……Don’t they?

    • Buy! Buy! Buy!………..why not

  16. Interesting article today in the Vancouver Sun http://propertychats.com/viewtopic.php?f=41&t=7393

  17. Just found this nice property. Vancouver condo with listed price $5M. Was sold for 1.5M in 2001. Nice!!! Lol.
    http://www.estateblock.com/vancouver-real-estate/1600-1311-beach-ave-vancouver-bc-v6e-1v6-mls-v1007116-1.html

  18. Farmer:

    “Equity in our case is built on a mountain of expectations regarding the never ending price growth of housing in Vancouver’s bubble market though.”
    “The upside of price bursts where 10 to 15% annual appreciation in homes can make you wealthy without owners having made unusual contributions to the home that would justify that growth are not considered normal though. These are exceptional times and this price growth we have seen in Vancouver is breaking all the long-trend rules. ”

    I think you’re talking about a market that we haven’t seen in a couple years at least. That said, you bring up some excellent points about our exposure to the global economy and the implications for sustaining our current prices.

    We’ve seen a stagnant market for a while now – no crash, no real price gains. The longer that lasts the easier it gets to maintain it. People buy and then move up the income ladder while they pay down the mortgage.

    However, we’re still talking a long time before we revert to fundamental values. Mortgage pay downs take time, and any significant jump in interest rates can easily wipe out the headway you made.

    I think you point out the danger we’re exposed to. A bad turn int he economy or an increase in interest rates could hurt us badly. For now, however, I think it’s worthwhile recognizing that the current market isn’t subject to the same degree of speculative motivations that we saw say, 5 years ago. Buyers are getting more active, but they are well informed about value (see this recent post: http://www.robchipman.net/2013/07/30/pricing-is-critical-for-real-estate-success/ for an example and my thoughts on it).

    “We stand on the verge of a credit crisis emanating from China…”

    If only we could believe their official stats, eh? The days of China being the global saviour seem to be numbered.

  19. August 22, 2013

    I doubt if the Vancouver RE market is at another turning point. Most Asian currencies vis-a-vis CAD are almost in free fall, making investment abroad much less attractive. All the gains that they have accumulated over these 3 years were wiped out in just a few weeks. Interest rates are only edging up. If the Van RE market is really underpinned by HAM, I don’t think the Vancouver RE market is healthy as it looks.

  20. Hope to see you back again soon, Vreaa. So much great stuff to discuss. Gold and wars and rising interest rates and the expanding indebtedness of the BC public just to name a few. Sure has been a loooooong time since we heard hide or tail from you but hope you are keeping welll and enjoying the summer (and you too Nem!). All is well here on the dark continent by the way. Sunny as always. My solar oven works like a hot damn. Been roasting chicken, coffee and peanuts just for fun and it boils water in thirty minutes flat. Cheers.

  21. Receding Gains

    File under “Willful Negligence”

    Out for beers with a friend this week who has won the real estate lottery by buying on Cambie 10 years ago. I mentioned prices had dropped this year. His response: The Globe & Mail said that prices were up 15%.

    I suggested prices were actually off from last year, and secondly he was probably referring to volume being up rather than prices. He immediately dismissed any suggestion of bad news. He simply didn’t want to hear it. The Globe has printed a 15% rise therefore that’s all he wants to know and hear.

    There is some kind of self-protective delusion going on. Among bears….plus also among owners. Owners simply are not equipped to deal with the concept of a falling market. They will believe what they want to believe and what fits with their desired view. It was an impressive filter of information that took place over beers. No point in fighting it, we moved on to discuss Seahawks v. Raiders.

  22. September 2nd……it is a ghost town on this site. Anyone still out there?

    • “That deafening silence you hear is the sound of the Canadian housing bears gone quiet,”
      Robert Kavcic, BMO
      August 30, 2013
      (read more: http://www.theglobeandmail.com/report-on-business/economy/housing/regulator-eyes-tighter-mortgage-rules/article14072417)

      Classic (and very timely) comment from the so called smart money crowd. IMHO, the bears have just been in hibernation and are in the process of reawakening. Stay tuned folks…

      • Interesting Bullwhip. I just came across another article in the same vein over at the National Post Magazine. The give away title is “The Sky is Not Falling”. Seems the bears are getting a run for the money as prices keep rising and sales booming. Good grief…..they might actually be right. We are not doomed after all.

        The Sky is Not Falling — National Post
        http://shopping.nationalpost.com/SS/Page.aspx?secid=136293&pagenum=18&sstarg=&facing=false&

      • @ Farmer

        In a number of previous posts I mentioned that I thought such a scenario might play itself out, but was still bearish over the med to long term. To put it bluntly, it is becoming more clear each day that the so called free lunch is wrapping up in short order and that the feeding frenzy we’ve all become accustomed too is coming to an end. Despite reports to the contrary, business is still down as compared to crazier times in previous years (this being said, activity has picked up recently). Prices in cities like Vanc, Toronto and so forth are simply too high for the average family to afford over the long haul. I know countless folks who haven’t been able to sell their homes for 18-24 months despite multiple price drops. The times when RE owners were ok with rolling the dice and biting off way more than they could handle (due to prices galloping higher) are over. The prospect of possibly being saddled with a gigantic mortgage in an environment with sideways to downward pricing action, rising interest rates and changing regulations is also becoming a lot less palatable for many. So, maybe some of these so called experts are partially correct and the sky isn’t (or hasnt yet) falling as we speak like we witnessed in the US, but I’d argue that the clouds are beginning to roll in and the temp has dropped considerably. IMHO, they won’t be burning off any time soon too and that is precisely what will catch everyone off guard. The quick rebound we witnessed post 2008/09 crash was just a one time event. Those jumping in to this market blindly expecting the very same result this time around will be cut off at the knees.

        The fact that all the bear blogs have gone dark (and we’re seeing articles like this one in the Globe, FP etc) is a clear sign we are in the later (if not final) innings. Stay tuned everyone… (and don’t run off too far)

        Cheers.

      • You could be right Bullwhip. Maybe the bears have just given up in exhaustion. I happen to agree with all of your points and can add many more which makes a damning case for real estate in the future. What I am trying to square though is why the arguments have been failing for such a long time. Like gold, real estate cannot be trading on fundamentals because if it were we would have seen a correction a long while back. This is what the banks understand that the rest of us seem to have missed. Real estate is emotion driven and one that is based on herd behavior. It can ONLY be when the public sees it as a dangerous asset that the tide might turn and that will not happen easily in a well diversified country like ours. I might be eating a little crow by saying that I must concede that when the majority of Canadians are homeowners that the trend towards negativity on that asset class will not move very quickly. The US meanwhile really is showing signs of recovery which is good for Canada. We are having a bit of a bumpy ride on employment numbers lately but nothing like what may have been predicted given the fear levels of a year or two back. So am I feeling complacent and starting to agree that a soft landing is the worst we will experience? Perhaps. As long as China does not tip the global apple cart when its credit bubble bursts we should limp through this ok without even affecting the deficit cutting agenda of the government. Call me a bear in retreat……or at least one that is in hibernation.

      • @ Farmer cont’d…

        I wouldn’t say a failed argument necessarily. IMHO, the bears are typically early on their calls (as many were in the US, but we know how that ended, don’t we?). As it is in our nature to always want to save face (and not deal with reality), I am not surprised this so called unwinding has been so slow in the making. Many here are acutely aware of the pressures placed on individuals to own, be in the market and to not miss the boat, so to speak. When it comes to decisions like this, many throw basic economic/financial principles out the window and cave in to the pressure 9 times out of 10. The banks, not surprisingly, are in there like a dirty shirt every second of the day trying to sell you on the idea that a mortgage is “good debt”, that RE is always a sound investment and that they’ve got your backs 100% of the time. While I don’t agree with it, it makes perfect sense and fully explains why so many are stuck in the mind boggling predicament they find themselves in today. So, what comes next? Well, it seems to me that many have finally come to the realization that becoming overnight millionaires is not in the cards. In fact, the grim reality is that the opposite has likely occurred for some already. One moment you’re thinking and acting like you were wealthy (on paper), the next you’re stuck in a cold shower dealing with the reality of being effectively insolvent and living on a hamster wheel month to month just to make ends meet. IMHO, many have been in the process of discretely trimming back their balance sheets wherever possible to slow the bleeding somewhat, but have left big ticket items like autos and RE out of the equation for the time being (as doing so would be too embarrassing). This all leads me to believe we are somewhere between stage 5 and 6 (see below). Next comes the realization and acceptance that you can’t spend more than you make indefinitely.

        http://www.thwink.org/sustain/glossary/CycleOfAcceptance.htm

      • I have to agree with you there Bullwhip. Since we are at such lofty price heights already it just begs to reason that not a lot of upside is left for the latecomers. Poor buggers had their sights set on all that free money that comes from no effort. Just sit on your sorry arse and let the paper profits roll in one fne day. Those days are gone. The easy gains manufactured by a global credit bubble have ended too. Now that the Federal Reserve has shown they are serious about reducing their bond buying program the spigot will tighten on the easy money whether rates remain low or not. Perhaps not so much in the US but certainly all around the globe as we are seeing a crisis of dollar shortages erupt in the developing world and many developing nations attempting to defend their currency. Capital is flowing back to the US (for the moment) and the strong dollar policy that President Obama has made as an essential element in his next choice of Fed Chair will lead to a widening US deficit over time. So capital flows in investment dollars might be returning to America but the idea seems to be that funds will be recycled right out the back door through expanded imports as the dollar surges. This is generally good for Canada (OK….it is really good for Canada) where exports are concerned but at the level of domestic borrowing we will likely see rates rise ahead of the Fed. I guess my point is that I see the market flattening but not dying as some predict. A peak is a peak and debt serfs will be minted whenever a first timer buys a home since no upside is sure at this stage. Just because we hit a peak does not necessarily mean we will experience a big decline though. That is my thinking right now.

      • @ Farmer

        Good comments.

        I don’t see a wave of trap door selling anytime soon either as too many out there still view every supposed set back as a buying opportunity. As time ticks on, however, more and more will wake up to the fact that the very favorable environment in which quick, easy, overnight windfall profits can be made has changed for the worse. This should, at the very least, keep a lid on things as the overall level of speculation in this market is reduced and the irrational minded start thinking with a little common sense again. Perhaps we are at the doorsteps of another 1992-2002 type of lost decade?

        Having said this, if any issues were to unravel unexpectedly (or deliberately for that matter) in Europe, N.America, China, Japan, the Middle East or elsewhere, we could very easily see a leg or two get kicked out from under these drug addicted ponzi financial markets bringing us right back to where we were in the fall of 2008. While some would welcome another opportunity to “buy the effin dip” and reload at the bottom, I’d argue that revisiting such a situation and reacting to it in more or less the same fashion would yield far different results. Ben Bernanke et al are keenly aware that global financial markets went into cardiac arrest a few years ago (unbeknownst to most) and have been doing everything in their power ever since to prevent another heart attack, which would likely be fatal if it were to occur as all confidence in the system would be lost.

        Today’s buyers have to consider the following:

        – if I were able to look into a crystal ball and determine that prices would remain unchanged over the next 10 years, would I still buy?

        – if I buy at today’s prices and both interest rates continue to rise and prices drift lower (or go sideways at best) for the foreseeable future, will I honestly be able to make ends meet?

        – if I buy today, am I financially and emotionally prepared to be in it for the long haul? ie. 10-15 yrs or more

        – over the long run, what are the odds that another big shoe drops out from under this ponzi financial house of cards currently being propped up by the money printers? how would asset prices be affected if such an event were to occur? could I deal with possibly making only small gains (if any) over the long term only to have either a significant % of my principal wiped out overnight without any advance notice OR in the worst case being chained to a 500 lb anchor and dumped into the water (figuratively, not literally)?

  23. Vancouver is the most boring city in the world…99% percent of people spend their lives on the computer….

  24. So is housing really in trouble? Not according to Michael Babad of the Globe and Mail who’s recent article “Does Canada Have a Housing Bubble” leaves open the suggestion that the fears of a bubble burst are overblown. Meanwhile the bear blogs are dying off bit by bit. Some are withering on the vine and just recycling the same cloned commentary we have all been reading for the past 5 years while others are in recess or outright closed for commentary. This one is included amongst those that have taken a long hiatus as housing perked and bubbled even more. We might conclude that is an acknowledgement that the bear case for housing has yielded no benefit for either the believers nor the host. I will have to admit I myself am now leaning towards a soft landing scenario. With US housing prices marching higher on the back of improving data it might be assumed that rather than Canadian home prices falling to meet the past US asset reckoning that instead US prices will rise to meet Canada’s presumed overpriced markets. We bears might give a hat-tip at this point to those in the banking sector who have generally expressed a higher level of confidence than some members of the public. While we are at it we should not forget to acknowledge the efforts of both Mr Carney at the Bank of Canada for his message and Mr Flaherty in Finance who has made significant changes to mortgages over the past years to modify the ebullinace in the market and temper the unbridled growth of credit. If we bears are in fact wrong it may be time to admit that and move on to other topics.

    • SeeBelowFirstFarmer…

      EveryOneElse? YourParable:

      Hint? On the balance of probabilities? It ends the way VREAA thinks it will. In the DeepDarkPast… ‘Nemesis’ might well have said, “Yes, Minister. HighConfidence.” [with the usual Caveats. Natch. Such is life.].

      • You can sure lose a lot of money waiting for an unpredictable outcome years in the making though, Nem. In this case, the herd is correct…..so far at least. We await the future. I don’t think it is going to be as bad, nor as good as most people predict.

  25. It’s a VeryMixedPicture at the moment, Farmer… but, as ever, discovering the truth is as simple as answering these questions… Who’s buying? What and where are they are buying? Why are they buying? &TheKicker: How are they paying for it?

    For context – I give you the following Quote ‘OTheWeekEnd:

    “I’m in a situation where I cannot afford to sell it, so I’m going to be renting it out, probably next month. “For me, it feels as if I am moving backward in life, but I have no choice, because I need to move on because I have a family now. I am going to move out and go rent a basement suite in Coquitlam.” – DerekHynes aka SurreyCondoOwner SevereBuyersRemorse

    [G&M] – Vancouver condo buyers take a second look

    …”Derek Hynes was thinking like a lot of Vancouverites when he purchased his one-bedroom condo in one of Surrey’s new towers. He thought its value would rise each year, enough to make the purchase an investment in his future. He’d build equity until he had enough to purchase a bigger place, maybe even the down payment on a house.

    The expectation that every home should build equity is a hangover from the pre-2008 years, when it seemed that real estate had nowhere to go but up, up, up. Average income earners were purchasing presale units and flipping them by the time they were completed, pocketing $50,000 or so in the process. Those days are long over. A shift is underway. As many condo owners who purchased five years ago and are trying to sell today can attest, the equity simply did not materialize. They are often breaking even, or selling for slightly more or less. Today, a condo in Vancouver is no longer viewed as a winning investment, so much as affordable housing and forced savings plan.”….

    http://www.theglobeandmail.com/life/home-and-garden/real-estate/vancouver-condo-buyers-take-a-second-look/article14162513/

    • Guess I am mostly looking at price itself Nem and seeing that they are quite resistant to reduction despite being overbought. Yes I know some homes have had big price cuts but overall the market continues to be stable despite stratospheric valuations. People are still buying. Others are still selling. No Armageddon scenario where we simply ran out of buyers has yet materialized that might force a price correction of any significance. In fact, prices have rebounded in some areas. Even rates rises have not terrorized the market as predicted by some (I don’t buy that argument by the way) nor have worries that equity markets might tumble bothered anyone much either. Most people who did not sell during the last minor rout are likely better off than those who panicked and bailed. So I don’t give it a lot of my energy anymore as we are discovering that this is a multi year process and nobody actually knows the final outcome with certainty.

  26. Sep 8, 2013

    Interest rates will have nowhere to go but up. The U.S. Fed just cannot suppress the rates forever as its credit is in a mess. The 10-yr bond rates are spiking up whether the U.S. “real” economy shows sign of recovery or not. In fact, there will be no “real” recovery at all.

    So will Canada and Vancouver home prices go up this fast and forever? No way!

  27. Sep 9, 2013

    A little bit off Van RE topic. Like Australia, Canada should gradually decouple itself from the U.S. and focus on more trade with Asia. The world credit underpinned by the oversupply of the almighty dollar is heading for a reset. In the process, the interest rate would have to go up.

  28. This blog is about as dead as the BC Legislature….
    😉

    • You’re JoshingUs, Kabloona! Right?

      We still have a legislature?

      • Nem: yes I can confirm it’s still there… I actually did the quickie tour a few weeks ago…… I recall they had some unfortunate actress pretending to be The Queen’s great-great Grandmum.

        😀

        Since it’s not really being used anymore, I think the place would make a swell Condo development….with attached “Museum of Obsolete Democratic Institutions”…..then they could pay off the deficit quicker or possibly cut the ferry rates!

        BC Ferry rates – now that’s something people really, really care about.

        😉

  29. still on a break? changing diapers is more fun than maintaining this blog, eh vreaa!

  30. Vancouver has more ‘for lease’ signs than Detroit . tough times for the best place on earth

  31. Sep 16, 2013

    Larry Summers suddenly drops out of the race as he knows that the U.S. economy is rotten with or without QE. With the spectre of QE tapering and rising interest rates in the U.S., new home sales south of the border fell 3/4 in July alone. Confidence is fading around the globe. Can Canada go on with generously low interest rates? Can the rate lock-in really save homebuyers from the coming storm?

  32. Twenty Four Hundred dollar peer square foot to buy space in Hong Kong! Let that sink in for a minute. Then repeat it and try breathing again. The insanity that passes for normal over in Asia is without precedence. Of course….it won’t afffect us. We are immune to what happens in Hong Kong and China! Ha Ha Ha. Believe that one at your peril because the facts speak for themselves. Vancouver and HK are highly correlated. Their fate is also our own.. Just the thought for the day.

    Puru Saxena: Fed Blowing Massive Bubble in Hong Kong Real Estate; $2400 Square Foot Listings!!
    http://www.financialsense.com/contributors/puru-saxena/fed-blowing-massive-bubble-hong-kong-real-estate

  33. A new view from Reggie Middleton arises. Look at his charts to see the world through his eyes. He talks about lending and risk premiums. Not something we have seen here before. By the way…. I am pretty sure Vreaa will speak again once we hit 100 posts…… So say something people.

    Is There A Bubble In The Canadian Condo Market?
    http://www.zerohedge.com/contributed/2013-09-21/there-bubble-canadian-condo-market-we-drill-down-facts-find-out

  34. What happens when we get to 100….? The Blog turns into a pumpkin….?

    😉

  35. Bull! Bull! Bull!

    vreaa, are you still expecting prices to go back to 2001 levels (adjusted for inflation)? when do you think we will see those prices?

  36. Seems like the media is desperate for big numbers… (real or otherwise)

    http://www.vancitybuzz.com/2013/09/55-million-condo-in-vancouver-largest-canadian-real-estate-transaction/

    Anyone know anything about this story?

    • This story was just meaningless fluff (well at least to most regular folk) and was reprinted, rebroadcast etc via the usual msm. Just this last Sat, there was a glowing, flowery feature in the Vanc Sun on the CEO of Holburn (Trump Tower, Little Mtn etc) and another on the remarkable success of the laneway housing program, which further illustrates how dependent this city is on the RE industry. While there have been some signs of life in this market as many sales were pulled forward due to changes in reg’s, low rates and what not, this transaction is obviously an outlier and should not even be factored into the typical monthly/quarterly stats that so many in the industry massage and spin with the utmost care and precision. Today marks the final day of Q3 and likely spells the beginning of the end to the greatest RE bull run this city has ever witnessed. While I do not predict the industry will simply fall flat on it’s face within the next 24hrs (however, the US economy might ??? lol) I do anticipate a change in wind direction and a gradual drop in the temperature, which will usher in a much slower than expected spring/summer in 2014. IMHO, by the time the so called tipping point is reached and most come to the realization that what we just witnessed is as good as it’s going to get, it will be too late to do anything about it.

      Hope to see you all in the spring (hopefully vreaa is back from hiatus too).

      Cheers,

      bw29

      • Doubtful. Vreaa caved. The bear case is pretty much dead. No 66% drop coming. Garth Turner is the last bear standing and even he is softening his position. Looks to me like the banks called this one right.

      • Good to hear Allen. This is all about public perceptions and sentiments. The media and a variety of bear blogs including other voices like those of Capital Economics and Ben Rabidoux served up a heaping dose of fear these past two years. Despite this the real estate market has shown tremendous resiliency and life carries on despite some headwinds. As one of the bears I have been pretty impressed (and pleased) that the worst of our predictions have NEVER come true. Nor are they likely too as long as employment remains stable and the US recovery continues albeit slowly. Perhaps it is time to declare the bear case invalid for it’s views that sometimes bordered on the preposterous. This is NOT 1929. We are NOT on a gold standard. This country in fact remains on a steady course where deficit reduction priorities have been yielding solid results and as long as such policies continue we should back off on expressing fears that are not reasonable given the outlook for the future. Certainly we should be worried about excessive private indebtedness but compared to others we are not facing a genuine crisis either as the role of Central Bank interventions have proven the arm chair pundits wrong time and again. Maybe this site is slated for the archives whose worries it expressed will seem humorous in the coming years. I really don’t know. What seems obvious to me though is that despite all the rationalizations and arguments in support of a housing crash have been misplaced. The public is fully invested and in no mood to embrace such a negative view. The bankers were therefore correct.

      • “The public is fully invested and in no mood to embrace such a negative view.”

        So there won’t be a crash because people aren’t in the “mood”? Hoping that an investment won’t fall in value will not prevent it from happening. Fundamentals dictate long-term asset prices.

      • I refer to sentiment. The public does not yet believe housing is at risk. They continue to buy without regard to fundamentals that are glaringly obvious regarding hazards and overbought conditions. There is no fear in the marketplace (yet) and so there is no urgency to sell even as prices go flat or see slight declines. Basically the public has confidence and that does not suggest a lot of trouble is coming anytime soon……..unless a black swan arrives of course. Why else do you think this market rose as far as it did? Sentiments and greed drove it up. Only fear will push it down.

  37. “Today marks the final day of Q3 and likely spells the beginning of the end to the greatest RE bull run this city has ever witnessed.”

    I disagree. September stats press release came out from the REBGV today (it’s posted at robchipman.net if you’re interested).

    We’re going to continue to see stagnating prices and we’re going to see inventory drop off markedly over the rest of this year (ok, my crystal ball is actually cracked, but that’s still my call).

    • If stagnating prices is the worst that materializes would should all breathe a sigh of relief and thank our lucky stars, Rob. The housing crisis in 20/20 hindsight appears to have been primarily a US phenomenon. The whole world was not infected in a global housing and credit bust as some predicted although there seems the potential exists for trouble ahead in quite a few countries. Spaniards, Irish and Greeks continue to live in misery after their assets tumbled into the gutter and did not recover. But that is now behind us. I hear Mark Carney is attempting to help reinflate the British housing bubble in sympathy with a US market that has been roaring back to life. The wealth effect credo is back in play. Is it not inevitable that European markets in a trough will now present a good oportunity to buy anew? And what reasons should be given that Canada will run countercyclical to a renewed emphasis in asset inflation that is now an obvious agenda in the global effort to stave off demographically driven deflationary trends? Incredibly, the worst may already be behind us. All that remains now is a long period of delevering for the developed economies as they slowly rebuild their economies.

      • “The whole world was not infected in a global housing and credit bust as some predicted although there seems the potential exists for trouble ahead in quite a few countries.”

        Actually, the virus that was unleashed in the US a few years ago was spread around the world in several stages. What so many fail to realize is that we’ve all been on meds for the last several years. Sure, this has certainly eased the pain for most in the short term, but has done nothing to actually fix the underlying problems which have been festering away the whole time. (much like applying Sensodyne toothpaste in the hope the decay and rot will simply cease and reverse itself) IMHO, the effectiveness of these pain killers is not only beginning to diminish in most cases, unintended side effects are starting to rear their ugly heads. I believe the chickens are now coming home to roost, so to speak, and global central bankers, who are basically keeping this house of cards propped up single handedly, are now down to their last cards. The next several months should be interesting at the very least. While I never predicted the world would come to an end starting on Oct 1, I do believe we are entering a period of considerable uncertainty which could drag on for much longer than most expect. Then again, if things are not handled with the utmost care and attention in the coming months, anything is possible really. The big risk is that way too many have been brainwashed to think that the so called financial crisis of 2008-09 is clearly behind us, that it’ll all be good from here onward and have not made the necessary preparations to deal with what is likely just around the corner. If anything, they have spent the last few years blindly doing the complete opposite.

        While I was very reluctant to chime in on some the recent posts here, I had second thoughts given the number of new messages and the rapidly escalating situation in the US. To those that think this is all hot air and everyone will simply agree to agree in the coming days, think again. IMHO, the damage is done regardless of what silly outcome may materialize. In the best case scenario, markets and consumer confidence still take a brief hit which will result in downward revisions to various measures of economic activity in the all important final quarter of 2013. If things were to somehow go off the rails and the US is either downgraded or flat out defaults, then all bets are off for those already priced in better than expected Black Friday and Xmas sales (not to mention sales of new homes with no money down)

  38. By the way, the “bad news” spiggot on real estate stories is drying up. Anyone else notice that trend? In a market dictated almost entirely by the mood of the public, perceptions and sentiment you all need to understand that our small media group (should they choose) can change the course of history by changing the flavour of its broadcasts. Bearish stories are already done to death. The world did not end and the media gets that. Normal people, which includes most Canadians, want hope. Sites like this are now pretty much doomed to become mere historical anecdotes of the times.

    Vreaa can buy a house and enjoy the ride like everyone else now.

  39. To Farmer, Rob, and the other bulls: the market has had it’s 12th shot of tequila and, after waiting the market history equivalent of a few minutes, you have declared that there will be no hangover after all.

  40. El Ninja:
    Saying the market is going to stagnate now qualifies as “bullish”?

    Or, saying the market IS stagnating (as it is, in fact doing) is “bullish”?

    Stagnation means loss in real terms. There will be a hangover. If prices do not rise (they aren’t and haven’t been for some time) before interest rates rise (that won’t happen soon, but it wither has to happen or we’re facing an unimaginable future) we’re going to see people feeling the pinch that comes with low interest rates, and transferred (inter-generationally or otherwise) wealth (often paper wealth).

    You’ll know I’m bullish when I tell you to buy.

    • When prices have become as egregiously decoupled from fundamentals as they have then, yes, any prediction other than a massive crash is bullish.

  41. Real Estate Tsunami

    Farmer,
    Trying reverse psychology to coax Vreaa back?

  42. Real Estate Tsunami

    No doubt that the bears are in early hibernation.
    But I believe that they will come out in droves again, once it’s clear that the last few monts were just a dead cat bounce, caused by irrational buyers rushing to lock in low interest rates.

    • Many bears were early to the party and got the door slammed in their faces. Same thing happened during the dotcom bubble and again in 2006-07. I personally know a few traders who got completely emptied trying to short the market prior to 2008. At the end of the day, they wound up being correct (at a considerable cost) as fundamentals always win out.

      FWIW, I would not categorize the last few months as being a dead cat bounce, but more of a flatline. Nothing moves in a straight line up or down. I think many have been confusing the pause in the decline in prices (and increase in volume from historical lows) as something of a recovery or spike upwards or at least that is how it is being spun by the usual cast of characters.

      I agree with your comment about the pre-approvals as my sister in law (who is a senior underwriter at one of the big five) mentioned the same thing to me just days ago. In fact, she also pointed out that activity level dropped off a cliff (ie. > 50% drop in activity) starting the beginning of Sept. when the fuse burnt out on the bulk of the pre-approvals. Going forward, I am expecting volumes to drop significantly while prices may not do much in the short term (bulls, this is no reason to whip your dicks out though). Come 2014, we’ll get a better idea of where things are it. I am expecting next spring/summer to be “different”. An all out collapse? Probably not, but a change in trajectory is almost certain. There is simply too much new product coming on stream, too much old product lying around unsold and too many uncertainties hanging over the market to convince enough of the fence sitters into making the biggest decision of their lifetimes. FWIW, I think the powers that be will have rough time with this glitzy new casino/hotel/condo monstrosity they have planned for False Creek North as the tables always get turned on themselves from time to time. Perhaps there is more going on here than meets the eye and we’re just not being clued in? Anyway, while we’re at it, I wish Holburn the best of luck of with the various endeavors they’ve currently got on their plate too. At best, the Trump Tower will wind up being a poor man’s Shangri-La (and we all know how that worked out for many of those “investors”)

  43. So can we just hold a funeral and call this blog deceased now and get it over with?

  44. Rob Chipman posts on VREAA…..? That’s gotta be a bearish indicator…

    😉

    It ain’t over ’til it’s over….

  45. Real Estate Tsunami

    If only these stupid Accordion people would stop posting, maybe VREAA,
    Would come back.

  46. Hollywood’s shortest Mountie…. 🙂

    • Strictly speaking, Kabloona – that honour goes to Constable Fudd…

      HappyThanksgiving, All!… Especially you, LongLostIllustrious Ed!… say what, if my calculations are correct, you must be perilously close by now to completing your NaturistOverlandTrek across the DarienGap*

      [*I do so hope you remembered to pack your SatellitePhone – FARC WiFiHotSpots are so atrociously unreliable/thinly spread these days! But you already know that… Right?]

      • Vreaa is doing the Darien Gap? Seriously? OK, that is worth reading about. Maybe we can get a post from there about the local scene and all the renegade kidnappers and ne’er do wells that pose as friendly locals. Actually I might like to see the place myself one day. Have to quit smoking first I think.

        But what is this “naturist” angle you speak of? Is she doing it in the buff?!!!

  47. Wascally wabbit…. 😉

  48. FWIW, another big drop in deals assigned over at my sister in law’s office. Basically, the team of underwriters now spaces out their workload over 3-4 hours and then mindlessly sorts paperwork for the rest of the day. In other words, it looks like that’s a wrap for this year folks. I wonder what spring promos the usual cast of characters will come up with in 2014 that they haven’t already used and what will anxious sellers who have had their places sitting on the market for the last 12-18 mos (@ their ACB or slightly higher) do in the coming weeks? IMHO, it will be put up or shut up time for many of them soon. After 2, maybe 3 years of sitting on their hands in the hope the market regains its parabolic trajectory (a la the Fed’s juiced up ponzi equity bubble) and a bidding war on their home somehow ignites spontaneously, the bills must certainly be piling up (going into the usual money draining holiday season). I think we will soon know which neighbors of ours were just casually attempting to top tick the market and which ones will have to swallow their pride and cut the cord before they wind up transferring what’s left of their savings to their bankers. This could very well be the calm before the storm (unless the BOC, Flaherty and co etc go out of their way to ramp up the idiocy to extreme levels…one never knows I guess). Anyway, stay safe everyone, enjoy the holidays and see you all in the spring.

    Cheers.

  49. Remember that kid (presumably) that was on here couple months back talking about shorting the CDN banks, how they would inevitably crash, yadda, yadda. Commenters, bears included (VREAA), were virtually unanimous in recommending against this action.

    Hopefully, the poster didn’t have too much capital to begin with so this lesson will be relatively ‘cheap.’

    Oh yeah, and HCG has been a rocket since news came out that all those fancy US hedge funds would be shorting it.

    • Hey, I won’t argue with any of this. It’s been a heck of a ride. IMHO, most of the low hanging fruit has been picked already. Don’t forget to sell some. You can never go wrong by leaving a little for the next guy. At the end of the day, these companies are scooping up biz for all the wrong reasons. Any clients these types of lenders pick up are ones that didn’t meet the already loosy-goosy standards of the big boys. As they get more competitive, they also drop their guard a little more too in what is ultimately a race to the bottom. Same thing happened in the US and elsewhere (recall this little gem for example: http://www.youtube.com/watch?v=r0HX4a5P8eE). There is no conceivable way this ends well. When the SHTF, take a wild guess who will have to foot the bill again?

      Remember, you don’t want the monkey.

  50. Meanwhile, back at the ranch….

    Larry is Triumphant! 😉

    http://www.yattermatters.com/2013/10/sorry-you-might-be-too-late/

    “Sorry You Might Be Too Late

    Posted October 18th, 2013 in Neighbourhood SnapShot, Vancouver East Side | Bookmark and Share

    By Larry Yatkowsky, Vancouver Realtor®
    Back Then

    Back in September 2010 I said “the Fraser community is a neighbourhood that is running hot and cold as it tries to find its market.” Now in October of 2013, observation at Open houses and Realtor coffee shop gossip tells me this neighbourhood market is on fire….

    …..Multiple offers are back in vogue. Open houses are busy!

    Once again you are greeted by a used shoe store at the front entrance and find yourself saying “Oh sorry, please excuse me” as you do the bump and grind in each and every room. If you are claustrophobic or are allergic to designer perfume the closeness at current open houses may generate an unpleasant reaction.

    Valet parking – forget it. You are on your own and be careful. Those who have visited and are leaving usually are in a distracted daze. They are so busy talking about what they liked or disliked that they pay little attention to you or your car….

    …..Consider the Top 10 asking prices then and now. The Fraser neighbourhood is now firmly in the million dollar bracket. The data prior is historical and I suspect that in the months ahead those average numbers will be a thing of the past….

    …As these prices continue upward set your vision on the neighbourhoods to the south around 41st – 49th at Main and Fraser. Take a look around and you will notice that a lot of the established Indian shops and restaurants are closing. The community support for those ventures is on the move creating an opportunity for early birds. Transportation, schools, college, a great new community center are in place. Anticipate that soon other amenities will begin to ‘pop’ up just like they have on Fraser.

    I will consider this outlook confirmed when Starbucks opens at Main and 49th.”

    That’s it….. PRICED OUT FOREVER…. but maybe you can get a job at the Starbucks.

    😀

  51. “That’s it….. PRICED OUT FOREVER….”

    Not so much. Low interest rates (which are here to stay for the foreseeable future) will support prices around current levels, but won’t push them substantially higher. Increased supply will exert downward pressure (I’m talking new condos as well as houses).

    Continued price stagnation is what’s in store. Once inflation hits (you’ll know when the news starts reporting seniors eating dog food again) rates will finally rise. No substantive price changes, up or down, between now and the Spring. In real terms prices will return to fundamentals eventually.

    • Well the fundamentals of Vancouver seem to suggest average prices will see a million five before they see a crash. What do the fundamentals even mean anymore in such a distorted environment?

  52. From the front lines…

    Someone I know was at Vancity doing regular bank stuff last week when she noticed the dude she once talked to about a mortgage application sitting on the ground floor. (He was sitting on the 2nd floor the last time she visited.)

    She went over to say “Hi” since he didn’t seem to be too busy. Turns out he said that he hasn’t seen a mortgage application since September. (Not sure if it was beginning or end of September, but it’s the end of October now…).

    So, I think you’re right. People are now PRICED OUT FOREVER. =) No more mortgage applications.

    Now what?

    • Yup, I’ve heard a few stories like this in the last several weeks. Given the time of year, I am willing to give the bulls the benefit of the doubt for a while longer. Regardless of what exactly is taking place, the market is completely dead right now.

      Just returned from Vegas a few days and would like to share some anecdotal evidence (which I think is very much related to the markets, RE and so forth) with everyone…

      I visit there 2-3 times per year. To me, the vibe down there was very 2007ish and certainly had deteriorated noticeably from what I witnessed on recent trips in 2012 and even earlier this year. Hotels and resorts are now trying everything in their power to extract more money from a shrinking customer base who is either tapped out, still operating in “bunker” mode or has finally come to their senses after surviving the near death experience of 5 years ago. Whether it’s mandatory resort fees of $25+, penalties for looking inside the minibar (but not consuming anything), ridiculously overpriced booze, gourmet food of every flavor and color, designer coffee drinks, show tickets, tours etc, the nickel and diming is impossible to miss now and people are starting to shy away from all the nonsense. Upon careful observation, it appeared as though most of the casinos. shopping malls and mid to high restaurants were operating well below peak capacity. In fact, many were completely empty at times. (ie. Crystals Mall) The only establishments that seemed to have any constant traffic were the buffets (esp at changeover times) and McD’s. If this wasn’t an obvious enough sign of a change in the wind direction, I’d also like to add that I have never seen such aggression from sales/service people of all types (from time share brokers to show ticket vendors to even bellhops and room service attendants). All in all, I saw very few smiling faces on what was an already dialed down crowd last week. To put it bluntly, people aren’t getting drunk, fat and happy in Vegas because it either costs too much to do so or worse yet, they don’t want to anymore. In the coming months I am certain we’ll see evidence of this in the inflated share prices of the various resort, RE and gaming co’s as we have already witnessed with many of the retail stocks. I am expecting this Xmas (esp in the US) to be disappointing numbers wise given that so many are either tapped out, shopped out or not experiencing the sugar rush they once felt when it came time to paint the town red. If the consumer decides to head for the exits en masse in the next 6-12 months (think Japan 2.0), not even our glorious central bankers and money printers will be able to do anything about it.

  53. Vancouver: a global rentier city. Old is new again.

    http://krugman.blogs.nytimes.com/2007/10/05/return-of-the-rentier-city/?_r=0

  54. Vancouver has had the worst economy in North America for the last 7-10 years

  55. Seeking Knowledge...

    Real estate sales are up. I still don’t get it. Where do people get the money to buy any of these (average) million dollar detached houses??? I ran through the numbers for even an slightly above average income family of 4 (say 80K per year) with a 10% down and you end up with a deficit each month. Do they not eat or need clothing?

  56. Sales are still coming together because 1) interest rates are low , 2) inter-generational wealth transfer and 3) equity transfer.

    • Seeking knowledge...

      @Rob: I understand the first two, but what is (3)? Is it someone moving up to a more expensive house or is it speculation or…?

      • By equity transfer I mean that if I buy a house for $100000 with a certain amount if equity and then watch the house increase in value to $200000 I can sell it and buy another house. My $100k house is now $200k and I transfer that equity to my next house.

        I haven’t necessarily gained much. I had a Vancouver house that I traded for a Vancouver house. I’m in (arguably) the same position. However, I’ve just spent double what I originally had. Where’d it come from? Arguably it came from an agreed upon fiction: my $100k house doubled in value so I can now buy your $200k house (which also doubled in value) without actually spending (or even earning) more cash.

        We just inflate the numbers.

        However, this tends to come with larger mortgages, upward pressure on rents and a departure from fundamentals. We’ve seen all three. Historically low rates enable it. Mortgage obligations and threats to real equity make prices sticky.

        You might argue that stagnation is the predictable outcome rather than a popping bubble. Mind you, make inflation an issue and raise interest rates a la 1980s, and things will change.

    • 1) at some point zirp will have little to no effect on one’s decision to buy or not (just as we witnessed with the japanese) especially if the economy continues to fumble along here and elsewhere.

      2) the transfer of wealth does not equate to an increase in overall wealth. i’d argue that getting my mom to tap her heloc for the purpose of providing me with a dp isnt necessarily the best thing to do anyway.

      3) if you are referring to a variation of point #2, then my answer is the same

      *** imho, the equity markets reached the so called tipping point today. i’m not sure if the music completely stopped or if the record simply skipped, but something certainly changed for the worse. many have known for a while now that the fed, ecb, boj et al are boxed into a corner but tptb have been able to fool the masses and trick the computers into thinking otherwise. wouldn’t it be ironic if the next market meltdown is amplified as a result of millions of negative tweets being blasted around cyberspace?

      • What makes you think the music just ended today, Bull? This is kind of curious to me because I had the same odd sense but nothing to pin it on. Maybe a remembrance day correction? About twitter….it must simultaneously be the best and worst of tech ideas to ever come along. The thing is just a huge time waster and yet very addictive for so many people. It intrudes everywhere you go now.

      • @ Farmer

        Still not sure if music stopped all together or record just skipped. Having said this, it has become pretty obvious to many that this market is not a real market anymore and hasn’t been for a while. A select few can do, say, tweet pretty much whatever they please to jerk stocks around left, right and centre. It is basically like the wild west now (and no one is held accountable). I am seeming more and more individual stocks either explode or implode overnight for no particular reason, which is pretty bubblicious behavior imho (especially with the latter occurring more and more frequently now). Watch what happens when the whole world is long the story of the day before the “official” news actually hits the airwaves. We are basically at a point where any so called “blue chip” stocks get taken out to the woodshed for 10, 20, 30….% or more on a routine earnings miss or some other bad news and/or fail to rally meaningfully on good news. Caution is warranted.

  57. I have a new theory about this site by the way….maybe Vreaa is in JAIL!!!!

  58. probably moved to California

  59. Aren’t you ardent Huffers tired of being w.r.o.n.g. for the last decade?
    Even VREAA has flown the chicken coop? Haw! Haw! Haw!

  60. Okay….. “VREAA WON THE LOTTERY!!”

    🙂

  61. VREAA is tired of being wrong every day of the year since she started this miserable blog. It must be pretty tough trying to keep the morale up and rally the troops to “keep a stiff upper lip, the prices are gonna drop”, while the prices keep going higher, and higher,….and HIGHER.

    She bought a house….hahaha, She now lives beside Garf Turner.

  62. The housing correction has been cancelled.

  63. Real Estate Tsunami

    VREAA is not VERA.

  64. whipmaster must have a miserable life for a guy who claims Vancouver is the greatest place on earth, he spends a lot of time on the computer does this guy ever go out, like most vancouverites he lives on the computer

  65. Teddy, 1~800~I~stink…..hahahahaha you would be rich.

  66. Nem, I was worried you were gonna post a clip of “Lash LaRue”….

    😉

  67. “It feels excellent. You can focus on other priority work and it’s nice just not to have to chase bears around.” – BC Conservation Officer Ben Beetlestone

    [CBC] – Fewer bears shot in B.C. this year by conservation officers

    …”Across most of B.C. the trend is similar, according to Frank Ritcey, the provincial coordinator for WildsafeBC. He says several factors played a role in ensuring fewer bears became problems in B.C. communities.

    “There was lots of grass growing so bears didn’t have to come into town. And we had an exceptional berry crop as well.”

    But Ritcey says human behavior also played a role in keeping bears out of many communities.

    “Part of it is the bears are staying out. But a lot of communities are getting on the bandwagon about managing attractants.”…

    http://www.cbc.ca/news/canada/british-columbia/fewer-bears-shot-in-b-c-this-year-by-conservation-officers-1.2430589

  68. Bitcoin and LiteCoin just went ballistic. Anyone here get a 100-bagger? This is partially caused by the weakness in the USD and will continue IMHO, just like I said it would.

  69. This is why real estate is going nuts.
    Fiat currency becoming worthless.
    The clowns on this site have been wrong for so long because they don’t get this concept.

  70. all of them

    • Impossible. When one currency rises another falls and vice versa. What you are saying can only happen when currencies are priced in gold but as you know gold has been in decline for more than two years. The US dollar has hardly budged since the Global Credit Crisis. In fact it is higher today than it was before Quantitative Easing began. I would say you are mistaken therefore that all currencies are in decline.

  71. Interesting that VREAA decided to drop dead just when the bubble is probably finally bursting for good, check this blog, this guy does all the hard legwork in tracking the price decline and listing and re-listing for each area….it’s happening folks

    http://vancouverpricedrop.wordpress.com/ The weekly drop….

  72. Farmer… yes some currencies go up… but they only go or down relative to other currencies. They will all go down as compared to gold and real estate in the longrun. And yes, I am fully aware that gold has fallen quite drastically in the mid`term…. but you have to understand that the markets are not ‘free’ in the short or even the medium term. The gold market has been manipulated downward to protect the dollar.

    • You will recall that you called people on this site “clowns” I suppose for not understanding that ALL currencies are in decline. So that is not why real estate is rising after all as we do know that the major currencies other than the Yen have been stable. I will suggest instead that what is happening relates to capital flows and distortions in the system related to interventionist policy but that the over-riding theme remains one of deflationary expectations and not the dissolution of any currency like the dollar or Euro.

      • Major currencies other than the Yen have been stable compared with each other because all the respective central banks are printing like crazy.
        So why are real estate prices around the world rising??? Because there are “too many dollars chasing to few goods”. Which means that compared to hard assets…. all currencies are going d.o.w.n.

      • That is not exactly correct, Whip. If too many dollars were chasing too many goods then more typically we would have inflation. We do not have significant inflation in most of the world though. On the contrary, commodity prices have in general been declining for the better part of 36 months which is a signal of deflation and lack of real demand in the global economy.. What you are seeing in the form of price appreciation in homes is indicative of distortions in capital flows out of Asia.

      • Additionally, despite the so-called printing of the Federal Reserve we know factually most of that money is not entering the economy nor being loaned out but rather being held on the balance sheets of banks as excess reserves collecting marginal interest of .25%. Velocity has just reached an historical low in the US. Inflation is far from being a legitimate threat therefore and it is clear we face deflation if the situation does not reverse soon. So there is not a clear relationship between Quantitative Easing and house price increases.

      • @ Farmer 1 December 2013 at 4:26 am

        Completely agree. QE has done nothing but line the pockets of the 0.1% over the last several years. What does the sale of some $40M penthouse (or whatever the price was) to some multi billionaire prince of persia have to do with the price of a 1br condo in some suburb outside of Vanc? Absolutely nothing, although the usual cast of industry players will argue otherwise. The vast majority of regular folks, who have not participated in this so called recovery in any meaningful way, are beginning to figure this out now. In fact, I’d suggest most have spent the better part of the last 4-5 years trying to get on more solid footing (if at all possible) and are continuing to operate in bunker mode as we speak (much like the Japanese have been doing so for decades). The most recent Black Friday/Thanksgiving sales numbers confirm this. Outside of ridiculous doorcrasher specials, people did not spend this year. Spending online is up (as expected) because it is a more efficient and cost effective way to shop. Consumers who are willing (and able) to buy are only doing so if prices make sense and service fees, shipping and other add ons are incl at no extra cost. I personally know of many who bought items (ie. reserved them) at prices they deemed to be attractive only to return them days later (at no charge) when the very same item popped up at a lower price elsewhere. Obviously, this sort of nonsense can’t last forever. Anyone long the stock market (or anything else for that matter) should take notice. Sooner or later the money printers will recognize that pushing on a string is pointless, get short the market, turn off the spigots and ride the roller coaster back down (like we saw in 2008). Wash, rinse, repeat…

  73. Real Estate Tsunami

    I think something called arbitrage is keeping the currencies in line.

  74. Five more comments to go and we’ll hit 200 on a dead blog!! Nice…..

  75. Whipmaster...Ker~thwhack!

    Well let’s push for 200 or b.u.s.t.

  76. 200. =)

  77. Whipmaster...Ker~thwhack!

    Hoo~Cudda~Not~Node? 🙂

  78. Thanks for the link, El Ninja….. nice graphs. We’re Number 1….yay!!!

    😉

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